Most companies have made some significant alterations in their organizational structure over the past two years.  Many of these adjustments were necessary in order to survive the economic realignment that has swept the globe.  But with the financial horizon showing some signs of recovery, it is now time to look more deeply at your organization to assure it is prepared for the resurgence that is coming. 

Any organizational change, no matter how small it may seem to leadership, has a clear ripple effect throughout the entire organization.  Some of the more dramatic ripples are:

Fear Induction– once an organization chooses to remove economic stability from even one employee, all employees experience fear at some level.  This kind of fear is a cancer to the organization and its mission.

Cultural Erosion – A corporate culture develops slowly and almost inexplicably over the course of time.  One fear-inducing event can squelch cultural growth and even cause a regression to survival mentality where everyone looks after their own interests without regard to the health of the organization as a whole.

Physical Burnout – Typically the removal of people from the organization means that those who are left must do more in order to pick up the slack.  The “work harder” mode can be sustained only for a short time before it takes a toll on morale.

Morale Deterioration – Keeping morale at a high level is critical to product quality, efficiency, customer service, employee tenure, controlling training costs, and stability in Human Resource functions.

Customer Skepticism – As customers learn of organizational changes and experience the ripple effects mentioned above, their loyalty can dissipate and open a door for them to look elsewhere for products and services.

Self-Fulfilling Prophesy – Once customers leave, further organizational changes may be necessary -- starting the ripple effect all over again. 

As I consult with companies all over the country, I find that most companies drastically underestimate the ripple effect.  These leaders have a tendency to compartmentalize each decision as if one choice has no affect upon another.  Nothing could be farther from the truth. 

One company I spoke with decided to eliminate the bottom 5% of their employees based on their past performance.  Most of these soon-to-be eliminated people had been on probation, had been the subject of complaints from customers or other employees or had exhibited seriously unacceptable behavior in the workplace.   

When I asked the leadership if they had considered what impact this pending decision would have on the remaining workers, they projected that it would have little or no negative affect and even pondered the possibility that morale and productivity would be improved because of their decision to cut these under-performing team members.  Based on organizational dynamics and the ripple effect I’ve seen so often, I urged them to reconsider these projections. 

What do you think happened? 

Since sales initially remained flat, one would expect profits to improve with the removal of this layer of labor.  But the ripple effect went into play, even though those who lost their jobs were not generally well-liked by others.  Fear was introduced into the culture and all the negative things mentioned above began to spin out of control.  Customers soon sensed the chaos and trouble inside the organization and began to panic and look for more stable alternate suppliers.  The company, and all the individuals within it, is now in full-blown survival mode.  The jury is still out whether or not they will be able to keep the doors open. 

TQM guru Edward Deming preached, “Fear is a barrier to improvement so drive out fear by encouraging effective two-way communication and other mechanisms that will enable everybody to be part of change, and to belong to it.” 

In order to prepare for the resurgence that is on the horizon, companies must now diligently repair the damage that fear has produced in their organization.  Here are some practical steps you can take to bring healing:

1.       Honestly acknowledge fear’s existence, and management’s role in creating it. 

2.       Regularly create forums where candid, constructive dialog can occur.  Listen.

3.       Be proactive in strengthening a team spirit. 

4.       Replace punitive actions with training actions.

5.       Do more than you think is needed.

6.       Humbly acknowledge that management needs every employee’s best in order to prosper – and they need yours.

7.       Share the rewards of survival and subsequent thriving with everyone equally. 

Be prepared for the good that lies ahead. 

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